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High Court of Australia |
GIBBONS v. WRIGHT [1954] HCA 17; (1954) 91 CLR 423
Lunacy
High Court of Australia
Dixon C.J.(1), Kitto(1) and Taylor(1) JJ.
CATCHWORDS
Lunacy - Insanity - Test of mental capacity for the validity of transactions - Effect of incapacity on conveyances, powers of attorney and contracts - Void or voidable - Who may elect to avoid a voidable transaction.
HEARING
Sydney, 1953, November 23-25. 1954, April 23. 23:4:1954DECISION
April 23, 1954.2. The title to the land in Park Street and part of the land in Liverpool Street is under the provisions of the Real Property Act, and the title to the remainder of the land in Liverpool Street is governed by the general law. Until 4th April 1943, the fee simple in the lands of both descriptions was vested in Olinda Gibbons and Ethel Rose Gibbons, who were sisters, and their brother Gustav Gibbons, as joint tenants. On that date the brother died. On 3rd July of the same year, the sisters, pursuant to a covenant to do so entered into on 14th April 1943, conveyed the land under the general law, and transferred the land under the Real Property Act to themselves and the appellant (who is Gustav's widow) as joint tenants. Shortly afterwards, however, they purported to sever the joint tenancy thus created. As to the land under the general law, each sister on 11th October 1944 mortgaged her interest to a solicitor, who happens to be the respondent, by means of a deed of conveyance with a proviso for redemption, to secure a loan of 10 pounds. As to the land under the Real Property Act, the sisters on 6th December 1945 executed a memorandum of transfer (subsequently duly registered) whereby each transferred to the other her one-third share in the joint tenancy in consideration of a similar transfer by the other to her. (at p435)
3. If these instruments took effect according to their terms, they were effectual to sever the joint tenancy and to cause the lands to be vested in the three ladies as tenants in common in equal shares: Wright v. Gibbons [1949] HCA 3; (1949) 78 CLR 313. But Ethel Rose Gibbons having died in January 1946, and Olinda Gibbons having died in November of the same year, the appellant claims in these proceedings that for want of mental capacity on the part of each sister the mortgages and memorandum of transfer were ineffectual to destroy the joint tenancy, and that accordingly the appellant is now solely entitled to the lands by survivorship. (at p436)
4. At the trial the learned Chief Justice of Tasmania left four questions to the jury. The first two related to the instruments of 14th April 1943 and 3rd July 1943 as a result of which the appellant had come to be a joint tenant with Olinda and Ethel Rose in the subject lands, and the answers to those questions denied that certain suggested grounds existed for invalidating those instruments. The third question was whether, at the date of the mortgages of 11th October 1944, (a) Ethel Rose Gibbons was capable of understanding the effect of the deed which she executed, and (b) Olinda Gibbons was capable of understanding the effect of the deed which she executed. The fourth question was whether, at the date of the transfer of 6th December 1945, (a) Ethel Rose Gibbons was capable of understanding the effect of the deed, and (b) Olinda Gibbons was capable of understanding the effect of the deed. To each part of the third and fourth questions the answer returned by the jury was No. (at p436)
5. These answers appeared to the learned Chief Justice to entitle the plaintiff to declarations that the two indentures of mortgage of 11th October 1944 and the memorandum of transfer of 6th December 1945 were nullities and of no effect, and he ordered judgment to be entered accordingly. The appeal to the Full Court was based upon a number of grounds, but the court found it unnecessary to deal with more than one. Their Honours held that a disposition of property made for valuable consideration by a person incapable of understanding its effect is not wholly void, but is voidable if, and only if, the disponee knew or had reasonable grounds to know of the disponor's lack of understanding and did not act in good faith. They further held that the transactions in question were for valuable consideration; but as facts sufficient to bring the case within the principle of law they had stated had neither been alleged in the statement of claim nor found by the jury, their Honours gave the parties an opportunity to amend the pleadings, and expressed their readiness to order a new trial if the amendments were made. The appellant, however, declined to amend, and accordingly the appeal was allowed and the judgment given at the trial was discharged. (at p437)
6. In the course of the case here and below, the question was discussed whether the jury's answers to the third and fourth questions were sufficient to establish such a degree of mental deficiency as the law considers relevant to validity. The expression "the effect of the deed", taken apart from context, is ambiguous, and in order to know what the jury meant by its answers it is necessary to consider the summing-up of the presiding judge. Unfortunately no official shorthand note was taken, and considerable discrepancies are found to exist amongst notes which were made by four of the professional gentlemen in court. The learned Chief Justice was not asked to settle the points of difference until fourteen months after the trial, and naturally he was unable to do more than correct two or three misapprehensions. The four versions of the summing-up attribute to his Honour a variety of expressions describing what it was that the sisters must have been capable of understanding. The deed, the nature of the deed, the document, what they signed, what they were doing; all these forms of words are said to have been used, together with more general statements, such as that the question was whether the sisters could not understand, or were of sound mind. It seems reasonably clear, we think, that the expression "the effect of the deed" as used in the questions asked of the jury referred to the broad operation of the deed, as distinguished from its precise terms. (at p437)
7. The learned Chief Justice was clearly right in treating the validity of the instruments in suit as depending upon the possession by Ethel Rose Gibbons and Olinda Gibbons of a degree of understanding relative to the nature of that which they were doing. The law does not prescribe any fixed standard of sanity as requisite for the validity of all transactions. It requires, in relation to each particular matter or piece of business transacted, that each party shall have such soundness of mind as to be capable of understanding the general nature of what he is doing by his participation. The case of Ball v. Mannin [1829] EngR 165; (1829) 1 Dow & Cl 380 (6 ER 568); 3 Bli NS 1 (4 ER 1241) though somewhat confusedly reported, is an authority in point. The House of Lords had before it certain exceptions to a charge delivered to a jury. The trial judge, after saying that the question to be tried was whether the person whose deed was in question was a person of unsound mind, added that to constitute such unsoundness of mind as should avoid a deed at law, the person executing the deed must be incapable of understanding and acting in the ordinary affairs of life. As to this, Lord Tenterden, who delivered the leading judgment, said: "perhaps in that he went too far, but that was a matter of which the plaintiff in error was not, under this bill of exceptions, entitled to complain" (1829) 1 Dow & Cl, at p 391 (6 ER, at p 572) . Then he turned to the appellant's main contention, that in order to avoid a deed the unsoundness of mind of the party executing it must amount to that degree of unsoundness which constitutes idiocy, a test which, it was said, "implies a total absence and deprivation of the faculty of reason in the party, and is not a question of degrees, but of the nature and quality of the mind and faculty, directly at variance with the language and direction of the learned judge" (1829) 1 Dow & Cl, at pp 386-387 (6 ER, at p 570) . To this contention their Lordships gave no countenance. They approved a statement in the charge that as one test of the requisite capacity the jury was at liberty to consider whether the person concerned was capable of understanding what he did by executing the deed, when its general purport was explained to him. The principle which the case supports, and for which Boughton v. Knight (1873) LR 3 P & D 64, at p 72 ; Jenkins v. Morris (1880) 14 Ch D 674 ; Birkin v. Wing (1890) 63 LT 80 and Estate of Park (1954) P 112 may also be cited, appears to us to be that the mental capacity required by the law in respect of any instrument is relative to the particular transaction which is being effected by means of the instrument, and may be described as the capacity to understand the nature of that transaction when it is explained. As Hodson L.J. remarked in the last-mentioned case, "one cannot consider soundness of mind in the air, so to speak, but only in relation to the facts and the subject-matter of the particular case" (1954) P 112, at p 136 . (at p438)
8. Ordinarily the nature of the transaction means in this connection the broad operation, the "general purport" of the instrument; but in some cases it may mean the effect of a wider transaction which the instrument is a means of carrying out: Manches v. Trimborn (1946) 174 LT 344, at p 345 . In the present case, it was necessary, we think, that the two sisters should have been capable of understanding, if the matter had been explained to them, that by executing the mortgages and the memorandum of transfer they would be altering the character of their interests in the properties concerned, so that instead of the last survivor of the three joint tenants becoming entitled to the whole, each of them would be entitled to a one-third share which would pass to her estate if she still owned it at her death. This is apparently not what the learned Chief Justice put to the jury. It was the direct effect of the instruments according to their terms, and not the resultant severance of the joint tenancy, that seems to have been referred to by the expression "the effect of the deed", in the questions ultimately formulated. But a jury which found the sisters incapable of understanding the direct effect of the deeds could hardly have found them capable of understanding the indirect effect of the deeds in severing the joint tenancy. We shall therefore consider the case on the footing that the appellant has established that, at the respective dates of the mortgages and the memorandum of transfer, the sisters lacked that capacity to understand which was necessary for the complete validity of the instruments. (at p439)
9. But proof of this was not enough to entitle the appellant to succeed in the action if the result was that the instruments were merely voidable; for an instrument voidable by reason of the incapacity of a party, or by reason of any form of imposition upon a party, is valid unless and until it is avoided by that party or his representatives. It is clearly not open to other persons, such as one claiming adversely to the party, to elect against the validity of the instrument; and perhaps it was a realization of this which led the appellant to decline the opportunity she was given by the Full Court to amend the pleadings and have a new trial of the action. Neither Ethel Rose Gibbons nor Olinda Gibbons purported in her lifetime to avoid the instruments severing the joint tenancy, and the respondent as their executor has always affirmed their validity. Consequently the appellant must fail unless the law is that a deed disposing of property is absolutely void if at the time of its execution the disponor was incapable of understanding what he was doing, in the sense we have mentioned. As to whether this is the law, there is a singular lack of modern authority. The matter was discussed in McLaughlin v. Daily Telegraph Newspaper Co. Ltd. (1904) 1 CLR 243 , and the opinion was there expressed that every deed executed by a lunatic is void, at least unless the lunacy was unknown to the person who procured the execution of the deed. The deed there in question, however, was a power of attorney, and not one directly affecting property. What was said in the judgment, therefore, went beyond the necessities of the case. The present appeal raises the problem in an acute form. (at p439)
10. The law relating to persons who are lunatics so found must be put on one side at the outset. Such a person is held incompetent to dispose of his property, not because of any lack of understanding (indeed he remains incompetent even in a lucid interval), but because the control, custody and power of disposition of his property has passed to the Crown to the exclusion of himself. Accordingly his disposition is completely void: Re Walker (1905) 1 Ch 160 . For a similar reason, the conveyance of a person in respect of whom, though he is not a lunatic so found, a receiver has been appointed under s. 116(1) (d) of the Lunacy Act 1890 (Imp.) (53 and 54 Vict. c. 5), has been held to be void: Re Marshall (1920) 1 Ch 284 . (at p440)
11. The development of the law in relation to the validity of acts done by a person of unsound mind not being a lunatic so found was much affected in earlier times by the currency of a doctrine (which grew up in the reign of Edward III despite earlier authority to the contrary: 2 Bla Comm 291), that no man of full age should be heard to set up in the courts his own insanity. This rule against disabling his own person, or stultifying himself, as it was variously called, applied to the party himself and to his privies in estate (as reversioners or remaindermen) and in tenure (as by escheat), but it is important to notice that it never applied to his privies in blood (as heirs) or his privies in representation (as executors or administrators): Beverley's Case [1598] EngR 5; (1603) 4 Co Rep 123b (76 ER 1118) . The doctrine was whittled away and finally abandoned. Its history is briefly recounted in the "learned note" to Gore v. Gibson in the Jurist (1845) 9 Jur 140, at p 142 , to which Baron Parke referred during the argument in Molton v. Camroux [1848] EngR 611; (1848) 2 Ex 487 (154 ER 584) : "This case, and the authorities referred to in it, shew how difficult it is to eradicate a false principle, which has once become established in the law of any country. It is expressly laid down by Littleton S. (405), that 'no man of full age shall be received in any plea, by the law, to disable his own person', or, as Lord Coke expresses it, to stultify himself (Beverley's Case [1598] EngR 5; (1603) 4 Co Rep 123b (76 ER 1118) ); and, as a corollary from this enlightened proposition, no person was allowed to avoid any civil act by shewing he did it while he was non compos mentis or in a state of intoxication, or could avail himself of the latter for any purpose, civil or criminal. (Co. Litt. 247.b.). It is, however, both just and important, to remark that a contrary opinion was strongly maintained by Fitzherbert, in his Natura Brevium (202.d.), and the more ancient authorities seem not to be uniform on the point. The doctrine of Littleton and Coke, however, completely prevailed (Stroud v. Marshall [1653] EngR 661; (1595) Cro Eliz 398 (78 ER 643) ; Cross v. Andrews (1598) 1d 622 ); and the ingenuity of courts in modern times has been frequently exercised in qualifying and restricting its mischievous operation, so that it is now almost, if not entirely, at an end. (See Kent's Commentaries, vol. 2, p. 451)" (1848) 2 Ex, at p 491 (154 ER, at p 585) . (at p441)
12. Even while the doctrine still flourished, the courts allowed an exception from it in the case of a contract made by a lunatic with a person who at the time was aware of the lunatic's insanity: Imperial Loan Co. v. Stone, per Fry L.J. (1892) 1 QB 599, at pp 601-602 . But it came to be held, not only that proof of knowledge of the lunacy enabled the lunatic to avoid liability under the contract despite the rule against stultifying himself: Dane v. Viscountess Kirkwall (1838) 8 C & P 679 [1838] EngR 1033; (173 ER 670) , but also that without proof of that knowledge (or at least proof of "the greatest reason to believe" that the lunacy existed) the lunacy was not sufficient to enable the contract to be treated as invalid, even by the lunatic's privies in representation to whom the rule against pleading his insanity had never applied: Molton v. Camroux [1848] EngR 611; (1848) 2 Ex 487 (154 ER 584); (1849) 4 Ex 17 (154 ER 1107) . This step having been taken, it was possible for Lopes L.J. in Imperial Loan Co. v. Stone (1892) 1 QB 599 to state the principle to be deduced from the cases in these terms: "A contract made by a person of unsound mind is not voidable at that person's option if the other party to the contract believed at the time he made the contract that the person with whom he was dealing was of sound mind. In order to avoid a fair contract on the ground of insanity, the mental incapacity of the one must be known to the other of the contracting parties. A defendant who seeks to avoid a contract on the ground of his insanity, must plead and prove, not merely his incapacity, but also the plaintiff's knowledge of that fact, and unless he proves these two things he cannot succeed" (1892) 1 QB, at pp 602-603 . (at p441)
13. Once the law had become committed to this view, it could not be maintained that problems concerning the contracts of persons of unsound mind could be solved by the simple formula: a contract requires the assent of both parties; a person of unsound mind in incapable of assenting; therefore no contract can come into existence between parties of whom one is of unsound mind. This appears not to have been appreciated at first. Consider, for instance, the case of Gore v. Gibson [1845] EngR 387; (1845) 13 M & W 623 (153 ER 260) . To an action by an indorsee of a bill of exchange against the indorser, the defendant pleaded that at the time of making the indorsement he was unable (through intoxication) to comprehend the meaning, nature or effect of the indorsement, and that the plaintiff then had notice of this. The position was put clearly by Baron Parke: "The averment in this plea that the defendant indorsed the bill, means merely that he wrote his name upon it; then the plea goes on to state, as matter of avoidance, that the act of so writing his name is not obligatory on him, because he was in fact non compos mentis when he did it" (1845) 13 M & W, at pp 626, 627 (153 ER, at p 262) . Earlier he had said: "But where the party, when he enters into the contract, is in such a state of drunkenness as not to know what he is doing, and particularly when it appears that this was known to the other party, the contract is void altogether, and he cannot be compelled to perform it". (As the context shows, void here meant voidable: Matthews v. Baxter [1852] EngR 927; (1873) LR 8 Exch 132 ). Yet in this very case Pollock C.B. (1845) 13 M & W, at p 626 (153 ER, at p 262) spoke of a contract requiring the assent of both parties, giving that as the reason for saying that when one of the parties was incapable of assenting there could be no binding contract. Alderson B. said: "When it is shewn that the contract by indorsement was made when the defendant was in such a state of drunkenness that he did not know what he was doing, and especially when it appears that the plaintiff knew it, I cannot doubt that the contract is void altogether" (1845) 13 M & W, at p 627 (153 ER, at p 262) . (Again, void meant voidable, as was to be pointed out in Matthews v. Baxter [1852] EngR 927; (1873) LR 8 Exch 132 ). Although this acknowledged that a contract was made by the indorsement, and that in some circumstances the contract could not be avoided, the learned Baron added: "It is just the same as if the defendant had written his name upon the bill in his sleep, in a state of somnambulism". In such a case, however, the signature would simply not be a signature having any relation to the bill of exchange at all. Though it would be on the same piece of paper, it would not be an indorsement of the bill. But a person who, having in truth indorsed the bill, sets up his inability to understand what he was doing, is necessarily seeking to avoid a contract made in fact. And so it was laid down in Matthews v. Baxter [1852] EngR 927; (1873) LR 8 Exch 132 , the view of Parke B., that the mental incapacity of one of the contracting parties is "matter of avoidance" only, being thus affirmed. (at p442)
14. This, of course, was not a new view. It had been "unanimously resolved" to this effect by the King's Bench in Beverley's Case [1598] EngR 5; (1603) 4 Co Rep 123b (76 ER 1118) "upon argument, and on good consideration". The logical flaw in the contrary theory was that it erroneously assumed that a plea that the defendant was unable to understand the nature of the document sued upon is equivalent to, or involves, an allegation that he did not intend to sign it. In truth the plea does not deny the defendant's execution of the document. It assumes his execution of it. It concedes that his mind, such as it was, went with his act. What it asserts is that the state of his mind was such that if the other contracting party was aware of it he ought not to be allowed to insist upon the contract. The essence of the plea is, therefore, not that the contract was not signed by the defendant, but that "a person who takes an obligation from another under such circumstances is guilty of actual fraud": per Parke B. in Gore v. Gibson [1845] EngR 387; (1845) 13 M & W 623, at p 626 [1845] EngR 387; (153 ER 260, at p 262) ; Bullen & Leake, Precedents of Pleading, 3rd ed. (1868), p. 606, note (b). For this reason, it is necessary to reject the suggestion made by Griffith C.J. in McLaughlin v. Daily Telegraph Newspaper Co. Ltd. (1904) 1 CLR at pp 272-274 , that the principle upon which a contract made with a lunatic by a person who is aware of his insanity is held not to be binding upon the lunatic is fundamentally the same as the principle which renders void ab initio a contract signed by a person who is fraudulently induced by the other party to believe that it is a contract of a different nature. The reason for holding a contract of the latter kind void is that the party imposed upon did not really sign his name as a signature to any such contract as appears on the piece of paper. In that sense, "his mind did not go with his pen"; Carlisle & Cumberland Banking Co. v. Bragg (1911) 1 KB, at p 496 ; Foster v. Mackinnon (1869) LR 4 CPD 704, at p 711 . "The deed is not his deed at all, because he was neither minded nor intended to sign a document of that character or class": National Provincial Bank v. Jackson (1886) 33 Ch D 1, at p 10 . No doubt it would be correct to apply the same reasoning to a case in which a lunatic wrote his name on a paper which in fact contained a contract, but did so in a frenzy, not even being aware what were the motions his hand was performing. That would be a simple case of non est factum, for the truth would be that the signature was not a signature to that document; it would be the kind of case which Alderson B. suggested in Gore v. Gibson [1845] EngR 387; (1845) 13 M & W 623, at p 627 [1845] EngR 387; (153 ER 260, at p 262) , when he spoke of a somnambulist writing his name in his sleep. But if the case made is only a case of incapacity to understand the nature of that to which admittedly the signature was affixed, no analogy exists with cases in which a seeming contract is held to be completely void for want of intention that the signature shall apply to any contract of such a kind. Indeed, after Molton v. Camroux [1848] EngR 611; (1848) 2 Exch 487 (154 ER 584); (1849) 4 Exch 17 (154 ER 1107) , whatever doubt may have persisted as to what must be proved in addition to mental incapacity in order to avoid a contract, it was the settled doctrine of English law that the contract of a lunatic was not void but was voidable only. Subsequent cases have confirmed this: Beavan v. McDonnell [1854] EngR 101; (1854) 9 Exch 309; 10 Exch 184 ; Imperial Loan Co. v. Stone (1892) 1 QB 599 ; Tremills v. Benton (1892) 18 VLR 607 ; Baldwyn v. Smith (1900) 1 Ch 588 ; Bawlf Grain Co. v. Ross (1917) 55 Can SCR 232 ; York Glass Co. v. Jubb (1925) 134 LT 36 . (at p444)
15. This being the state of the law with respect to contracts, how can it be otherwise with respect to conveyances? If the only objection to a conveyance is that the conveyor was incapable of understanding what he was doing by executing it, there is no ground for denying that it was in truth signed, sealed and delivered by the conveyor as his deed. If it be said that the mind of the conveyor did not go with his acts, the answer applies with no less force than it does in the case of a contract that that is not what is established by proof of a mere absence of capacity to understand the nature of the document. We need not stay to consider whether, in order to avoid the deed, it is necessary to prove, in addition to the conveyor's incapacity, knowledge on the part of the conveyee that the incapacity exists, or whether other circumstances making the transaction less than fair to the conveyor will suffice. (Even in regard to contracts, the question whether unfairness matters, if the party dealing with a person of unsound mind is ignorant of his condition, appears not yet to have been finally resolved: per Sargant L.J. in York Glass Co. v. Jubb (1925) 134 LT, at p 43 ). The point to be observed here is that proof of a conveyor's incapacity to understand the nature of the instrument is not proof that it is not his deed, and it therefore provides no logical ground for holding that the deed is void. Whether the authorities nevertheless require that conclusion to be accepted remains now to be considered. (at p444)
16. In the decisions on the subject, the special case of a power of attorney receives frequent mention. It is important to recognize, however, the unique character of a power of attorney as an instrument not affecting the title to property or the rights or obligations of persons, but merely conferring an authority. The conception of a power of attorney voidable by reason of lack of understanding in the grantor would not be without its difficulty; it would mean that an authority to bind the grantor would be retrospectively defeasible, with the result that acts done in exercise of that authority would be rendered void, not upon proof of such circumstances, amounting to the perpetration of a fraud by the other party to the act, as the grantor would have had to establish if he had done the act himself, but upon proof of circumstances constituting a fraud by the donee of the power, whose guilt might not be accompanied by any unfairness at all on the part of the other party. But whether or not this consideration has been at the back of it, the fact is that from early times the power of attorney of a lunatic has been regarded as void. (We use the word lunatic in this connection as referring to a person incapable of understanding the nature of the acts or transactions which the particular power of attorney purports to authorize). Decisions to this effect have meant that the power of attorney is inefficacious as a source of authority to the donee to act on behalf of the lunatic. But so to hold is merely to illustrate the general rule of law that a lunatic cannot appoint an agent: Stead v. Thornton [1832] EngR 355; (1832) 3 B & Ad 357 (n) [1832] EngR 355; (110 ER 134) ; Tarbuck v. Bispham [1836] EngR 213; (1836) 2 M & W 2, at p 8(150 ER 643, at p 646) ; Elliot v. Ince (1857) 7 De GM & G 475, at p 486 (44 ER 186, at p 190) ; cf. Drew v. Nunn (1879) 4 QBD 661 ; Yonge v. Toynbee (1910) 1 KB 215 . In order to reach this conclusion there is no necessity to consider whether the power of attorney is the lunatic's deed, for whether it is or not it cannot have any operation to create the relationship of principal and agent. That such a power of attorney confers no authority on the donee was the actual decision of this Court in McLaughlin v. Daily Telegraph Newspaper Co. Ltd. [1904] HCA 51; (1904) 1 CLR 243 , and the actual decision of the Supreme Court of the United States in Dexter v. Hall [1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) ; and it was this proposition alone which the Privy Council affirmed in Daily Telegraph Newspaper Co. Ltd. v. McLaughlin (1904) AC 776, at p 780 But, as we have said, in the reasons given for the decision in McLaughlin's Case (1904) 1 CLR 243 in this Court the general topic of the void or voidable character of a deed executed by a lunatic was discussed, and the view was put forward that every such deed is absolutely void, at least unless it was procured innocently. The Court's consideration of the matter was much influenced by Dexter v. Hall [1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) , and to that case it is necessary now to turn. (at p445)
17. The judgment, which was prepared by Strong J., begins with some
observations of a general character which are sufficiently met
by what has
been said already. These are followed by the remark: "It must be admitted,
however, that there are decisions which have
treated deeds and conveyances of
idiots and lunatics as merely voidable and not void" [1872] USSC 45; (1873) 15 Wall 9, at p 26
[1872] USSC 45; (21 Law Ed 73) .
Beverley's Case [1598] EngR 5; (1603) 4 Co Rep 123b (76 ER 1118) is referred
to as one such decision, and other cases, both English and American,
might
also have
been mentioned. But there is one clear decision to the contrary, and
the judgment of Strong J. fastened upon it.
That is the case
of Thompson v.
Leach (1698) Carth 435; Comb 438, 468; 1 Ld Raym 313; 3 Mod 301; 12 Mod 174
(87 E.R. 199). . Lands
had been devised
to A for life, remainder to his sons
successively in tail, remainder to B in tail, remainder to the devisor's right
heirs. A, while
yet having no son, executed a surrender of his life estate to
B. A was non compos at the time. After the surrender
A had a son. If
the
surrender was merely voidable and therefore effectual unless and until
avoided, the particular estate which supported
the contingent
remainders
limited in favour of A's sons in tail became merged in B's remainder in tail.
The result of this would
have been that
the contingent remainders were
destroyed; for a mere right of action, such as the right to avoid the
surrender, would
be insufficient
to support a contingent remainder, and a
contingent remainder once extinct could not be revived. On the other hand,
if
the surrender
was completely void the contingent remainders were not
destroyed, and A's son became entitled in possession upon
A's death. The
King's
Bench considered that the deed was void, and accordingly held that the
contingent remainder became an estate
vested in possession
at A's death. The
judgment was affirmed in Parliament "without much debate": Leach v. Thompson
[1698] EngR 30; (1698) Show PC
150 (1 ER 102) . Sir Bartholomew Shower, who reported the case,
set out the arguments of counsel in some detail,
but as was his custom
he gave
no account of the reasons for the decision. Possibly the House acceded to the
final submission made
in argument, that "the
Word amens or demens imply that
the Man had no Mind, and consequently could make no conveyance". If so, the
case would seem to have
been treated as one of complete dementia in which it
was impossible that there should have been any real
execution of the deed,
rather
than as one in which the deed was duly executed but by a person
incapable of understanding its effect.
It is enough to say, however,
that as
there is no record of any principle of law laid down in the case by the House
of Lords it is
the judgment of the King's Bench
which has to be considered.
The numerous reports of the case vary a good deal in their accounts
of the
judgment, but the reasoning
of the judges appears to be accurately stated in
the Modern Reports:
"The grants of infants, and of persons non compos, are parallel both in law
and reason; and there are express authorities that a
surrender made by an
infant is void; therefore this surrender of a person non compos is likewise
void" (1869) 3 Mod 301, at p 310
(87 ER 199, at p 204) . (at p447)
18. The proposition that an infant's surrender is void was, of course,
erroneous. In support of it the case of Lloyd v. Gregory
(1638) Cro Car 502
(79 ER 1032); W Jones 405 [1675] EngR 1048; (82 ER 212) was cited; but in Zouch dem. Abbott v.
Parsons [1765] EngR 89; (1765) 3 Burr 1794, at pp
1806, 1807 (97 ER 1103, at p 1110); 1 W Bl
575, at p. 578 [1746] EngR 721; (96 E.R. 332, at p. 333). , it was shown that Lloyd v. Gregory
(1638)
Cro Car 502 (79 ER 1032); W Jones 405 [1675] EngR 1048; (82 ER 212) decided no such
thing. The notion that by the common law an infant's conveyance
is void, was
finally exploded in Zouch
dem. Abbott v. Parsons [1765] EngR 89; (1765) 3 Burr 1794 (97 ER
1103) and, apart from statute, it has been
held ever since that infancy makes
a disposition merely voidable:
Lumsden's Case (1868) 4 Ch App 31 ; Martin v.
Gale (1876) 4 Ch
D 428 . It is remarkable that although, in Dexter v. Hall
[1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) , Strong J. cited Zouch dem. Abbott v.
Parsons
[1765] EngR 89; (1765) 3 Burr 1794 (97 ER 1103) as laying it down "that deeds of an infant
which do not take effect by delivery of his hand
are
void", he did not advert
to the fact that this statement appears (1765) 3 Burr, at p 1804 (97 ER, at p
1109) as part of a quotation
from Perkins' Profitable Book, which goes on:
"but all gifts, grants or deeds made by infants, by matter in deed or in
writing, which
do take effect by delivery of his hand, are voidable, by
himself, by his heirs, and by those who have his estate". Nor did he refer
to
the observation which the judgment makes upon this: "The words which do take
effect are an essential part of the definition; and
exclude letters of
attorney, or deeds which delegate a mere power and convey no interest". It may
be added that in the next paragraph
of the judgment in Zouch's Case [1765] EngR 89; (1765) 3
Burr 1794 (97 ER 1103) there is a quotation from Brooke's Abridgment, which
includes the
sentence: "And besides, the delivery
of a deed can not be void;
but only voidable". (at p447)
19. The judgment in Thompson v. Leach (1698) Carth 435; Comb 438; 1 Ld Raym 313; 3 Mod 301; 12 Mod 174 (87 ER 199). proceeded, therefore, upon a misconception of the law in relation to deeds executed by infants. The case did not deter Blackstone from writing that "Idiots and persons of nonsane memory, infants, and persons under duress, are not totally disabled either to convey or purchase, but sub modo only. For their conveyances and purchases are voidable, but not actually void" 2 Bla. Comm. 291. . The case of Campbell v. Hooper (1855) 24 LJ Ch 644 is a decision to this effect, for it was there decided that foreclosure can be decreed in respect of a mortgage given by a lunatic. A case which was cited in Dexter v. Hall [1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) as having followed Thompson v. Leach (1698) Carth 435; Comb 438; 1 Ld Raym 313; 3 Mod 301; 12 Mod 174 (87 ER 199). was relied upon only as having decided that, despite the supposed rule against stultifying oneself, under the rules of pleading then in force a defendant was entitled to prove his insanity, as a ground for avoiding a deed, under the plea of non est factum. (The rules were later altered to require that a defence of insanity be specially pleaded: Harrison v. Richardson (1835) 1 M & Rob 504 (174 ER 174) ). It was further said in Dexter v. Hall [1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) that the doctrine of Thompson v. Leach (1698) Carth 435; Comb 438; 1 Ld Raym 313; 3 Mod 301; 12 Mod 174 (87 ER 199). was asserted also in Ball v. Mannin [1829] EngR 165; (1829) 1 Dow & Cl 380 (6 ER 568); 3 Bli NS 1 (4 ER 1241) . In that case, however, no consideration was given by the House of Lords to the distinction between void and voidable deeds. The parties had agreed below that the sole question to be tried was whether a certain deed was or was not "valid at law"; and the decision given in the House of Lords was confined by the bill of exceptions to certain limited objections to the trial judge's direction to the jury as to what constituted "such unsoundness of mind as should avoid a deed at law". (at p448)
20. Except as a decision that a power of attorney is void if the donor was incapable of understanding its effect when he gave it, the case of Dexter v. Hall [1872] USSC 45; (1873) 15 Wall 9 (21 Law Ed 73) cannot be regarded as a satisfactory authority. It was largely responsible, nevertheless, for the views which were expressed as to deeds generally in the judgment in McLaughlin v. Daily Telegraph Newspaper Co. Ltd. [1904] HCA 51; (1904) 1 CLR 243 . Of the authorities referred to in McLaughlin's Case [1904] HCA 51; (1904) 1 CLR 243 and not already discussed, there are only two to which particular reference need be made. One is Jenkins v. Morris (1880) 14 Ch D 674 , as to which Griffith C.J. said that in that case the validity or invalidity of the deed was treated as being dependent upon the mental condition of the person by whom it was executed, and that no question of knowledge or want of knowledge of his condition on the part of the other party was raised. The answer was given by Fry L.J. during the argument in Imperial Loan Co. v. Stone, as reported in the Law Journal (1892) 61 LJQB, at p 450 , when he pointed out that it by no means follows from the fact that the only issue which had been directed to be tried in Jenkins v. Morris (1880) 14 Ch D 674 was whether the person concerned was or was not of sound mind, that the finding of the jury upon that issue determined the matter. The other case was Howard v. Digby [1834] EngR 135; (1834) 2 Cl & F 634 (6 ER 1293) , from which Griffith C.J. quoted two extracts from the speech of Lord Brougham. In neither of these passages was the learned Lord Chancellor concerned to distinguish between void and voidable instruments. The case was one in which the personal representative of a deceased lunatic wife was seeking to enforce against the husband a liability for arrears of pin-money, and the question for decision was whether the husband could set off amounts he had expended in supplying his wife during her lifetime with those things to which pin-money was usually applicable. The point the Lord Chancellor was making was simply that, although a lunatic, as he thought, was incapable of binding himself consensually (and presumably he meant binding himself conclusively), yet he (and his representative) could become liable for money or money's worth received. The principle applied seems to be that which the Court of Appeal was later to explain in In re Rhodes (1890) 44 Ch D 94 , namely that a lunatic's receipt of goods or other benefits suitable to his position in life may give rise to an obligation, which is implied by law and to which the lunacy affords no answer, to pay for those necessaries (as they are called) out of his own property. This, indeed, had been laid down by the King's Bench eight years before Howard v. Digby [1834] EngR 135; (1834) 2 Cl & F 634 (6 ER 1293) , against the opposition of Lord Brougham himself when appearing as counsel in Baxter v. Earl of Portsmouth [1826] EngR 754; (1826) 5 B & C 170 (108 ER 63) . His lordship's language in Howard v. Digby [1834] EngR 135; (1834) 2 Cl & F 634 (6 ER 1293) ought not to be read as a pronouncement upon the question which we have here to decide. (at p449)
21. Upon the authorities as they now stand, it appears to us that we ought to regard it as settled law that an instrument of conveyance executed by a person incapable of understanding its effect, in the sense of its general purport, is not on that account void, though in the circumstances it may be voidable by the conveyor or his representatives. (at p449)
22. If consideration of the merits of the appeal had led to the opposite conclusion, a serious question would have arisen by reason of the fact, to which the Chief Justice drew attention during the argument, that in earlier proceedings in the same action orders have been made declaring that the joint tenancies subsisting between Olinda Gibbons, Ethel Gibbons and the appellant were severed by the indentures of mortgage executed on 11th October 1944 and the memorandum of transfer executed on 6th December 1945. This came about in the following manner. The statement of claim alleged incapacity on the part of Olinda Gibbons and Ethel Rose Gibbons in respect of the memorandum of transfer but it did not do so in respect of the indentures of mortgage as the plaintiff was then, apparently, unaware that those instruments existed. They were set up, however, by the defence, which contained a counterclaim for a declaration that the joint tenancy in the whole of the land was severed by the three instruments. At this stage, that is to say before reply, the parties obtained by consent an order for the determination of a point of law before the trial, the point, as stated in the consent order, being "whether by reason of the acts deeds and instruments admitted or alleged in the defence (that is, the indentures of mortgage and the memorandum of transfer) the joint tenancy subsisting between the plaintiff and Olinda Gibbons and Ethel Rose Gibbons was severed". The point of law came before Clark J., who made an order that the joint tenancy subsisting in the Real Property Act land was not severed by the memorandum of transfer, but that the joint tenancy subsisting in the land under the general law was severed by the indentures of mortgage. On appeal, this Court discharged that part of the order which related to the Real Property Act land, and in lieu thereof made a declaration that the joint tenancy in that land was severed by reason of the making and registration of the memorandum of transfer [1949] HCA 3; (1949) 78 CLR 313 . Subsequently, in 1951, the plaintiff filed her reply, and therein alleged for the first time a want of mental capacity in Olinda Gibbons and Ethel Rose Gibbons in respect of the indentures of mortgage. The action was then brought on for trial, neither party appreciating, apparently, that the order of Clark J., as varied by the order of this Court, in terms concluded in favour of the defendant the ultimate question whether the joint tenancies were severed. It is difficult to see how, in the present appeal, the Court could have given a decision inconsistent with its own previous order and with an order of the Supreme Court from which no appeal had been brought. There was no accidental slip in either order, for the intention of both courts plainly was to answer the precise question which the parties had joined in submitting for decision. The question was not expressed hypothetically, and if it had been the courts might well have declined to give an answer while the issues of fact remained undetermined. (at p451)
23. However, it has seemed desirable to consider the appeal on its merits. For the reasons which have been stated the appellant's claim in the action cannot be sustained, and the appeal should be dismissed. (at p451)
ORDER
Appeal dismissed with costs.
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